Financing Receivables

12 Months Ended

Dec. 31, 2019

Financing Receivables

The Company’s financing receivables primarily include commercial mortgage loans, syndicated loans, policy loans, advisor loans, margin loans, credit card receivables and the deposit receivable. See Note 2 for information regarding the Company’s accounting policies related to loans and the allowance for loan losses.

Allowance for Loan Losses

Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses. The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. The Company does not have an allowance for loan losses for the deposit receivable as the receivable is supported by a trust and there is minimal risk of loss.

Commercial Mortgage Loans and Syndicated Loans

The following table presents a rollforward of the allowance for loan losses for the years ended and the ending balance of the allowance for loan losses by impairment method:



	December 31,
	2019			2018			2017
	(in millions)
Beginning balance	$	24		$	26		$	29
Charge-offs	(1		)	(2		)	(2		)
Provisions	—			—			(1		)
Ending balance	$	23		$	24		$	26

Individually evaluated for impairment	$	—		$	—		$	—
Collectively evaluated for impairment	23			24			26

The recorded investment in financing receivables by impairment method was as follows:



	December 31,
	2019		2018
	(in millions)
Individually evaluated for impairment	$	17	$	24
Collectively evaluated for impairment	3,323		3,239
Total	$	3,340	$	3,263

As of December 31, 2019 and 2018, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $17 million and $24 million, respectively. Unearned income, unamortized premiums and discounts, and net unamortized deferred fees and costs are not material to the Company’s total loan balance.

During the years ended December 31, 2019, 2018 and 2017, the Company purchased $162 million, $221 million and $200 million, respectively, and sold $54 million, $51 million and $267 million, respectively, of loans. The loans purchased consisted of syndicated loans. The loans sold during 2019 and 2018 consisted of syndicated loans. The loans sold during 2017 primarily consisted of consumer mortgage loans. The Company recorded a loss of $7 million on the sale of consumer mortgage loans during the year ended December 31, 2017.

The Company has not acquired any loans with deteriorated credit quality as of the acquisition date.

Financial Advisor Loans

The Company offers loans to financial advisors for transitional cost assistance. Repayment of the loan is dependent on the retention of the financial advisor. In the event a financial advisor is no longer affiliated with the Company, any unpaid balances become immediately due. As of December 31, 2019 and 2018, principal amounts outstanding for advisor loans were $645 million and $558 million, respectively. As of December 31, 2019 and 2018, allowance for loan losses were $28 million and $25 million, respectively. The allowance for loan losses related to loans to financial advisors is not included in the tabular disclosures above. Of the gross balance outstanding, the portion associated with financial advisors who are no longer affiliated with the Company was $15 million and $18 million as of December 31, 2019 and 2018, respectively. The allowance for loan losses on these loans was $10 million and $13 million as of December 31, 2019 and 2018, respectively.

Credit Card Receivables

In the third quarter of 2019, Ameriprise Bank, FSB acquired a credit card portfolio from a third party bank. The credit cards are co-branded with Ameriprise Financial, Inc. and issued to the Company’s customers by the third party. The principal amount outstanding of credit card receivables was $96 million as of December 31, 2019. The allowance for loan losses was not material as of December 31, 2019.

Credit Quality Information

Nonperforming loans were $25 million and $16 million as of December 31, 2019 and 2018, respectively. All other loans were considered to be performing.

Commercial Mortgage Loans

The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating

were less than 1% of total commercial mortgage loans as of both December 31, 2019 and 2018. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. In addition, the Company reviews the concentrations of credit risk by region and property type.

Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:



	Loans				Percentage
	December 31,				December 31,
	2019		2018		2019		2018
	(in millions)
East North Central	$	239	$	216	9	%	8	%
East South Central	121		107		4		4
Middle Atlantic	182		187		6		7
Mountain	251		237		9		9
New England	54		62		2		2
Pacific	831		814		30		30
South Atlantic	723		731		26		27
West North Central	214		213		8		8
West South Central	182		148		6		5
	2,797		2,715		100	%	100	%
Less: allowance for loan losses	19		19
Total	$	2,778	$	2,696

Concentrations of credit risk of commercial mortgage loans by property type were as follows:



	Loans				Percentage
	December 31,				December 31,
	2019		2018		2019		2018
	(in millions)
Apartments	$	692	$	621	25	%	23	%
Hotel	51		43		2		1
Industrial	429		453		15		17
Mixed use	78		54		3		2
Office	419		435		15		16
Retail	931		897		33		33
Other	197		212		7		8
	2,797		2,715		100	%	100	%
Less: allowance for loan losses	19		19
Total	$	2,778	$	2,696

Syndicated Loans

The recorded investment in syndicated loans as of December 31, 2019 and 2018 was $543 million and $548 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. The primary credit indicator for syndicated loans is whether the loans are performing in accordance with the contractual terms of the syndication. Total nonperforming syndicated loans as of December 31, 2019 and 2018 were $11 million and nil, respectively.

Troubled Debt Restructurings

The recorded investment in restructured loans was not material as of both December 31, 2019 and 2018. Troubled debt restructurings did not have a material impact to the Company’s allowance for loan losses or income recognized for the years ended December 31, 2019, 2018 and 2017. There are no commitments to lend additional funds to borrowers whose loans have been restructured.

Deposit Receivable

The deposit receivable was $1.5 billion as of December 31, 2019.

In the first quarter of 2019, the Company reinsured approximately $1.7 billion of fixed annuity polices sold through third parties, which is approximately 20% of in force fixed annuity account balances. The arrangement contains investment guidelines and a trust to meet the Company’s risk management objectives. The transaction was effective as of January 1, 2019.